The Reaction of Central Banks to the Economic Crisis Caused by the Covid-19 Pandemic

Abstract

The purpose of the article is to highlight the monetary policy measures adopted by the world’s central banks as a reaction to the economic crisis caused by the Covid-19 pandemic. The monetary policy strategies and instruments used and the effects of their application have been analyzed separately at each stage of the pandemic and in different geographical areas, starting with 11 March 2020, when the World Health Organization (WHO) declared Covid-19 a global pandemic, continuing with the next strict shutdown two months to a gradual relaxation of restrictions and the attempts to economic recovery, ending my analysis with the second wave of infections spread from mid-July. The article presents how the central banks’ monetary policy measures and its different transmission channels have responded to a rapidly growing global demand for liquidity. In the addressed issue we used a quantitative research method based on the collection of a large number of numerical data from a wide variety of statistical sources, their classification, and calculations made with them. The results are presented in graphic form and show the cause- effects relationship between the studied variables.